Low-cost benefit option could complement roll-out of NHI

THE Council for Medical Schemes (CMS) has rightfully indicated that the introduction of the low-cost benefit option (LCBO) should complement the roll-out of the NHI by expanding private health-care coverage and making it affordable to more people.

This is according to the chief executive officer of the Health Funders Association (HFA), Phumelele Makatini.

She says a slimmed-down list of covered conditions focused on the most common and pressing health concerns, with a strong emphasis on preventive and primary health care, could meet most families’ health needs.

The basket of services currently included in Prescribed Minimum Benefits ensures all medical scheme members have unlimited benefits for emergencies, maternity, and chronic conditions, including HIV, asthma, diabetes, and many more severe health conditions. This means that irrespective of what members claim for these conditions, a person has the security of knowing they will never have to pay out of their pocket for them.

“Greater access to these services helps to reduce the need for hospitalisation, thereby easing pressure on the public health system to build longterm capacity,” said Makatini.

She said the complexity of the NHI project was immense, and the tax base to fund it was narrow. There will therefore need to be gradual steps towards addressing practical implications for society sustainably.

“For now, 8.9 million people are covered on medical aid, representing some 15% of the South African population. The introduction of low-cost benefit options could see this proportion grow to an estimated 4 million people, alleviating the public health system’s overwhelming patient numbers and creating the breathing space to improve quality care standards as envisioned under National Health Insurance,” she said.

She said the time was ripe for a shake-up in the structure of health-care funding models, and the regulatory provisions for primary health care and low-cost benefit options would see many more employed South Africans and their families accessing private health care, many of them for the first time.

Makatini further noted that medical schemes had felt the pressure of increased claims since the pandemic, and the global financial fallout has also contributed to the local scenario of fewer young, healthy people being able to afford traditional medical scheme membership as we know it.

“In the past few years, the sustainability of the current model has been challenged, and as a result, various medical schemes have merged and even been liquidated. We need new ways of catering to the growing demand for more affordable options in private health-care cover,” said Makatini.

She said it was unclear what the tax implications of purchasing these more affordable health cover products might be, and whether these funds were set to contribute towards the funding mechanism for NHI.

As it stands, this tax season, many South African households receive tax rebates on their medical scheme contributions, which lightens the load on public health services. It has been previously suggested that removing this income tax credit could help fund either LCBOs or the NHI; however, in practical terms, a family of three with a household income of R20 000 a month would see their tax bill soar by about 27%, according to the HFA’s technical advisory committee.

She said that a refreshing of the regulatory framework for health cover would enable the benefits of private health care to reach many more South Africans who had never had access before.

“This would make enormous, revolutionary strides towards developing a healthier population and reducing the burden of disease so that public facilities could be in a better position to cope with in-hospital care for patients, both now and when NHI is eventually fully implemented,” said Makatini.